This was an actual bank robbery in Detroit…
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Posted in : Absolutely Meaningless Comedy
Buy my stuff!
One of the trends we’ve been seeing with the proliferation of independent analysts, bloggers, consultants, journalists and other pundits, is for many of these characters to launch their own “firms”, when the product is, really, just them. Or them and a few freelancers they could tack on to their website to make them look like an actual company of people.
Now, if an individual was actually planning to grow a company over time – and genuinely adding real staff which does more than organize their mailshots, calendar or spell-check their reports, they can be forgiven, however, there are far too many people out there masquerading as company CEOs when they really don’t have a “company” to run. It’s just them. And some freelance admin person.
When I saw my old friend, Chris Lewis, announcing an exciting conference “The Great Telco Event” he is running in London this November, I was amazed at the sheer number of “companies” I have never heard of from a pretty impressive collection of individual speakers (many of whom are telecom analysts who found themselves going independent after that market commodotized and their firms couldn’t make enough profit out of them). Now, I have heard of most these experts as individuals, but these weird company names? I mean, why bother? Aren’t they just confusing their clients and prospects?
Aren’t we in a new generation of individuals promoting themselves? Isn’t the real brand equity in their personal brands as opposed to some obscure name they trumped up? And credit to Chris – one of the great all time telecom analysts, who has recently branched out as “Chris Lewis Insight“. Now… when prospective clients want to hire Chris, they want him and his services – and his handsome face. So why not brand his venture under his own brand?
“But didn’t you do the same thing Phil?” I hear you ask…
Kind of – I wanted to use a successful blog as the initial platform to grow a research firm, and that is exactly what we achieved, and it quickly culminated with us abbreviating the blog name to HfS to sound more corporate (try getting meetings with CFOs when your firm is called “Horses for Sources”). My friend Ray Wang had a vision of assembling a “constellation” of star analysts, and that is what he has achieved with some great additions like Holger Mueller and Peter Kim at Constellation Research. Now, if myself of Ray had never actually bothered to build genuine companies of experts, we should just call ourselves “Fersht Inc.”, or “Wang and Assocs LLC” (or whatever). And if the whole of HfS decides to quit on me tomorrow and I decide I can’t be bothered to replace them, I’ll probably do just that!
The Bottom-Line: We’re in the era of creating our individual personas – it’s time for people to exploit that
When you go on LinkedIn these days, it reminds me of those market scenes in historical movies and paintings, where people are selling their services and wares openly to all the town (B2C) and the other merchants (B2B). People are marketing their skills and competencies before their corporate identity. In fact, I find I have to click on someone’s actual profile and scroll down a couple of screens to find out who employs them these days. Who cares if you are an SVP at Blah Blah Bank… I want to know what you’re good at! And on twitter, many people do not even bother to add their company name in their profile at all.
I believe careers are now going in that direction – corporates want to reduce their core and contract for expertise as and when they need it. At the same time, an increasing number of individuals are shunning the corporate treadmill to enjoy the fruits of being self-employed – either as themselves or their pretend company. And those individuals are picking up new skills – often without realizing it – that makes them more valuable professionals – they learn how to market themselves well, how to hustle for clients, how to think outside of the box, how to differentiate their ideas and personas…
We can lament the shortage of Digital talent within corporations, but maybe that’s because the next wave of “Digital” skill and creativity is coming from outside of the creaking corporate firewall.
Posted in : Social Networking, Sourcing Best Practises, Talent in Sourcing
Outsourcing: Making the same mistakes over and over and expecting people to stop moaning
One of the the core issues we discussed at last week’s Blueprint Sessions was the frustrating and seemingly never-ending issue of providers over-promising delights to clients to win engagements and then failing to deliver on them. However, the group of 45 industry stakeholders all agreed that all of the entities are at fault in setting up too many of these engagements to fail:
Buyers: Thinking that they are going to get wads of free transformational consulting that will miraculously appear from the provider – even thought they haven’t actually paid for any;
Providers: Promising wads of free transformation consulting to augment their operational obligations, even though they probably will not really give the client any (but who cares, as it’ll be too late for the client to back out in two years’ time and they aren’t contractually obliged to provide it);
Advisors: Strong-arming providers to respond to RFPs in three weeks and allowing very little (if any) interaction time for providers to interact with their clients in advance to develop the right solution and get a stronger balance between delivery capability and desired outcomes.
So what happens when you look at a culmination of many buyers’ first five years’ experiences after signing a contract? Let’s take a look at some collective journeys:
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Four steps this industry needs to take to avoid engagement failure in the future
1) Less focus on the deal, more on the relationship. Providers are all-too-frequently being forced in the position of saying what they need to win the deal, as opposed to having a structure to propose a realistic partnership that works for both sides, with specific milestones and balanced delivery expectations.
Possible Solutions: Advisors need to create a more collaborative RFP process that allows for more interaction between the buyer and interested providers. Advisors also need to set better expectations for their clients and potentially get their governance consultants involved earlier in the down-selection process. In addition, providers need to take a stronger look at how to develop their existing clients – and view them as future growth opportunities, as opposed to always chasing that next deal simply because there’s more immediate money on the table, which means more consultative account managers and less out-and-out salespeople.
2) Buyers need to get real proof-points on provider culture, performance and capability. Buyers need access to pragmatic experts who talk to a multitude of peers in other organizations in order to get a stronger view of the post-transaction performance of providers. Simply relying on the rose-tinted references ponied up to the advisor, or reading inaccurate analyst reports (usually premised on rose-tinted client references) isn’t going to give them the accurate expectation of what they are likely to experience down the road with each provider.
Possible Solutions: Buyers need to do their own research and exploration and use the expertise of advisors and analysts to validate their strategy. Talk to other buyers, go to conferences, seek them out on social media groups. Ask advisors and analysts to make introductions to other buyers, and if they can’t do that for are probably wasting their money on them. Buyers should also try to hire at least one inhouse expert to work with the internal and external parties to add a dose of realism and experience to the whole process – there are plenty of experience experts in advisors/providers shops who are interested in getting off the road to get some buyside experience.
3) Early exit provisions should be implemented as an insurance from “value disappointment”. There needs to be smarter forethought in the whole process where the buyer and provider prepare in advance for failure to meet expectations. Outsourcing relationships need to be marriages with pre-nups. Providers really do not want miserable clients and buyers need providers prepared to invest in them, or give up trying to outsource, as they clearly aren’t cut out for doing it properly.
Possible Solution: If providers are being shoe-horned into responding to a price-squeezing, innovation-sapping relationship, there should be an early exit provision for both sides (for example after 36 months). If the relationship isn’t working – it probably makes sense for both sides to exit quickly, cost-effectively and painlessly.
4) Buyers need to recognize the profession of services and sourcing governance. After seven HfS summits, we can declare officially that most corporate staff have little knowledge of understanding of what services and sourcing governance people do and why they matter (or even exist). In fact, we estimate that 90% of employees are ignorant of the role and value a services governance profession provides – or should provide. Until services and sourcing governance is recognized as a crucial professional discipline, we are going to continue to be an industry struggling for an identity littered with flawed relationships and ignorant perceptions of what we all do.
Possible Solution: Appoint a Chief Services Officer (CSO). Many CPOs are proving ill-equipped to manage services governance, so surely its time for smart organizations to create the CSO function, with a direct reporting line to the top of the company? It’s hard to convince top talent to work for buyer governance teams when they are submerged 4 layers down the organization form any decision-making authority. With the concerted move to increase investments in offshoring, shared services and outsourcing, not having an empowered senior corporate officer responsible for transforming operations is lunacy for so many of today’s organizations.
The Bottom-line: If we are to survive as an industry, we need to stop making the same old mistakes
Didn’t Albert Einstein* once say: “The definition of insanity is to do the same thing over and over and expect different results”. Then, surely, it’s time for the industry formerly known and “outsourcing” and now known as many different things (including outsourcing), started to change the way it operates. Providers need to get focused on making their existing business really shine, buyers just need to take control and dictate what they expect and then figure out how to realistically get it, and advisors need to focus on more than forcing nice-priced deals frosted with bullshit.
*Most people will attribute this quote to Albert Einstein but there is no evidence to suggest that he made this statement. Current consensus is that it came from the author Rita Mae Brown in her book Sudden Death, but we needed to find a cheesy way to tie Albert to outsourcing, so there you have it…
Posted in : Business Process Outsourcing (BPO), HfSResearch.com Homepage, IT Outsourcing / IT Services, Outsourcing Advisors, Outsourcing Events, Sourcing Best Practises, sourcing-change
As we digest the incredible dialog from the HfS Cambridge University blueprint summit this week, the overwhelming mood from enterprises is one of frustration to get beyond this tactical status quo of legacy operations, in which so many find themselves wedged.
And most services providers aren’t going to come to the table with the technology and talent until their customers clearly dictate and demand what they need to cross this chasm. And those providers which simply do not have the Digital capabilities their clients demand to address these gaps, run the risk of being relegated to the class of legacy staff augmentation provider that performs only the low-value grunt work, or ditched from many client provider rosters altogether. And this is already happening with some ambitious determined clients.
When we surveyed 312 enterprise buyers on their two-year expectations from their current outsourcing relationships, it becomes abundantly clear that those desired business outcomes from yesterday’s outsourcing era have quickly become today’s table-stakes:
Click to Enlarge
Clients are rapidly losing patience with services providers that aren’t working proactively with them to provide more value than the basic terms of the original contract. I feel like we’ve had this conversation before, but this time many clients are doing a lot more than having a quiet moan that they aren’t really getting value beyond very basic service provision. This time, many are actively looking to fire their provider if they cannot get past operational teething issues and actively begin the process of transforming the way they do things. In so many instances, clients are beginning to doubt their current provider actually has the skills or acumen that they were promised during the early courting days prior to contract signing. In today’s climate, close to a quarter of clients will actively seek to eject their current provider if they have not effectively helped them standardize, automate and transform their processes within the next two years. This is no longer about achieving significant cost reduction targets and getting basic tactical operations functional – it is about moving clients into a future state that is much more effective than the current one.
The focus on Digital outcomes has dramatically emerged, with many clients increasingly no longer viewing tactical success as their end-game. Whereas, in years gone by, the focus was slowly shifting from cost reduction to better global scale (see our 2010 study), the onus on clients to move the conversation to one of better analytical capability, more savvy and creative support talent, access to better tools and tech, has leapt onto the table: these are the new stakes. While most providers will not get fired today for Digital failure in the short-term, it is already very clear that an increasing majority of enterprise clients expect their providers to bring these skills to the table. 60% already see operational analytics as very important as an outsourcing outcome, and a similar majority are already expecting their providers to pony up savvy talent and better tech within two years.
The Bottom-line: Innovation is now defined and most clients know what they need. Providers have to step up if they want permission to play in the next phase of this industry
Remember all those fantastical debates about “What is innovation and how can I get some?” Well, the answers are now unraveling and it’s becoming clear how both buyers and providers can be successful in the future – and how they can also maintain the status quo and risk being relegated to the detritus of legacy operations. Clients no longer yearn for transformation of processes, reduced costs and flexibility of global scale – because that’s what most have already bought and paid-for. Hence, those not getting these outcomes today are not yearning, they are feeling duped and let down – and know they are failing and going down on their provider’s sinking ship.
The table-stakes of 2014 are now a must-have for clients which have their eyes firmly planted on what they need to achieve in the medium and long term. They want providers who know how to engage with them to help them get to the next level. However, too many of today’s providers have lost interest in their clients once they have reached an operational steady-state – and are constantly laser-focused on winning that next deal, as opposed to fixing their existing ones.
Until our industry takes the painful steps to fix the current legacy it has created, many will likely fail in creating a new era of Digital services. This means both clients and providers need to invest in the skills and tools they need – and recognize that failure to do so will likely result in their ultimate failure to drag themselves out of operational low-value purgatory. In addition, intermediaries and advisors need to stop forcing these deals to get done in three-week RFPs so they can walk away with their fees paid with little care for what that client and its provider really achieve down the road. We all need to focus on planning and investing in the long-term future and not solely on the quick wins staring us in the face near term.
Posted in : Business Process Outsourcing (BPO), Cloud Computing, Digital Transformation, HfS Surveys: State of Outsourcing 2014, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, SaaS, PaaS, IaaS and BPaaS, smac-and-big-data, Sourcing Best Practises, sourcing-change, Talent in Sourcing, the-industry-speaks
Posted in : Outsourcing Events
Posted in : Business Process Outsourcing (BPO)
Looking forward to a phenomenal couple of days… a great opening buyers session was enjoyed by all!
Posted in : Outsourcing Events
It’s official: outsourcing is not dying – it’s simply become a key part of a broader enterprise operations strategy: Integrated Global Services. 312 buyers recently shared their investment intentions over the next two years during our 2014 State of Outsourcing study, conducted with support from KPMG, and their operations strategy clear: one in four are reinvesting heavily in their global shared services operations, while seven-out-of-ten are continuing to make (largely moderate) investments in their outsourcing delivery.
The long and short of this is that 93% of enterprises today have shared services and 96% are outsourcing some element of their back office IT and business operations, while 27% are actually reducing their investments in their own internal business units. What’s more, 56% are already increasing investments in their centralized hybrid governance function to manage their mix of service delivery models. To this end, the increasing majority of enterprise buyers today are investing in an integrated global services model that orchestrates their process delivery across all available vehicles of sourcing:
Click to Enlarge
Let’s delve a bit deeper here and view how these investment intentions have shifted over the last three years, comparing this with the 2011 and 2013 State of Outsourcing studies:
Click to Enlarge
Shared Services makes its strongest re-emergence as a delivery model for a decade. While the broad number of firms increasing their focus on both the outsourcing and shared services models is relatively consistent over the past 3 years, the difference today is the intensity of investment. Outsourcing has slowed to a more moderate pace, while a number of large-scale enterprises are focusing on moving more work into their internal shared services centers – the first time in a decade we are really seeing shared services making a reemergence of this magnitude.
Buyers are shifting more of their higher-value work into their offshore shared services operations. It’s become abundantly clear that buyers are now aggressively globalizing their operational strategies and are leveraging their offshore shared services centers, almost as much as their outsourcing providers, as they seek to move more work from their internal business units into an integrated centralized services delivery model. As our previous post from the 2014 study emphasized, close to 3-out-of-10 enterprises are increasing the offshore component of their finance and accounting, over the next year, into both their shared services and outsourcing operations, while similar trends are occurring across IT, procurement, HR, industry-specific and customer service functions. From our discussion with multiple buyers of late, many are moving much of that next wave of business processes into their offshore shared services that require a greater deal of context and specificity to their own businesses and, in many cases, compliance requirements.
Providers need to earn the trust of their clients in order to take on higher value processes. In many cases, providers need to prove they have the capabilities to move beyond highly transactional processes before their clients will trust them to take them on. We will discuss this dynamic further in our next post on the study, but far too much outsourcing today has struggled to delivery value beyond transactional process delivery, usually because of the talent deficiencies on the buy side and mismatched expectations on the provider side, as buyer expectations evolve during the course of a relationship.
The integrated services model is going to force ambitious providers to evolve their capabilities if they want to survive in the long-term. The traditional global services model has evolved largely by transactional work being moved initially into shared services centers and buyers eventually outsourcing that work to providers as it becomes easier to “shift”, once is has become centralized into a smaller number of locations. Now a similar cycle could well be happening with middle and front office processes. However, as global management of integrated processes matures, and buyers become increasingly adept at developing their own offshore management competencies, it is not guaranteed that the majority of buyers will continue to look at the traditional outsourcing model down the road (and several are already evaluating their future sourcing strategies).
In short, there are multiple levers now available to clients seeking greater productivity and value, such as SaaS-based business platforms, high-value analytics tools and skills, better automation and robotization of their processes, and simply hiring their own offshore teams to do the work, as opposed to paying the (often higher) rates of the providers. Hence, those providers which are getting ahead of the disruption curve and supporting clients with more productivity tools and capabilities beyond simply offshore arbitrage and process standardization (read earlier post), are the likely winners down the road as clients integrate their global services delivery.
The Bottom-line: Outsourcing is teetering at a crucial juncture between providing genuine value and low-cost staff fungibility
In today’s global operations environment, many buyers are getting smarter and figuring out they can do a lot more themselves. Many are evaluating the potential of new tools and technologies, niche provider capabilities and managed governance services as vehicles to find new sources of value. While there are clearly several more years of productivity improvements to be made simply shifting work to lower cost locations and tweaking processes, eventually buyers will have to transform their current operations model from the status quo of today.
Simply plastering more and more lipstick on the same old pig is eventually going to fail for many, and transforming the global operations model into an integrated range of services, underpinned by cloud-based platforms, plug-and-play digital capabilities and supported by teams of innovative and analytical staff is the promised land most ambitious clients yearn to (one day) find for their organizations.
Providers need to prove they can do more than basic operations, otherwise outsourcing runs the risk of becoming a staff augmentation model for flexing operations as opposed to a strategic partnership between provider and buyer that can add more skill, technology and analytical capability for clients.
Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, Cloud Computing, Digital Transformation, Global Business Services, HfS Surveys: State of Outsourcing 2014, HfS Surveys: State of the Outsourcing 2013, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, Robotic Process Automation, SaaS, PaaS, IaaS and BPaaS, Security and Risk, smac-and-big-data, Sourcing Best Practises, sourcing-change, state-of-outsourcing-2011-study, Talent in Sourcing, the-industry-speaks
As with the airline industry, consulting firms have become highly commoditized with little client service and the willingness to serve others
-Kevin Parikh, Avasant, June 2014
In Part 1, Avasant’s CEO Kevin Parikh talked about his emerging advisory firm and how it intends to help its clients tackle digital transformation. In Part II we warm up the talk to cogitate the impending talent crunch, the democratization of sourcing and the new levers enterprises can pull in their relentless quest to find new productivity… so without further ado, here’s Part 2:
Avasant CEO Kevin Parikh addresses some big industry issues with an ambitious consulting approach
Phil Fersht, CEO, HfS Research: Kevin, traditionally outsourcing advisors were focused primarily on reducing labor cost more than anything else. But now it looks like the decisions of driving out labor costs are democratized within companies. Let’s say they came out to look at Cloud; they can look at crowd sourcing type solutions. They can look at robotics. They can look at a lot of things and not just outsourcing. In fact, in many cases outsourcing is like a band-aid. Do you feel today’s advisors are really equipped to help their clients think through all these variables?
Kevin Parikh, CEO and Senior Partner, Avasant: Phil, I love how you put it—the democratization of sourcing selection. We all have a vote. We can take what we want.
Phil: Exactly…
Kevin: And I think Cloud has enabled us to do that. Are the typical advisors prepared to enter this market? Absolutely not. The traditional outsourcing advisor is focused on towers of service, offering templates and financial models. This really requires a strategy-oriented consultant coupled with a sourcing consultant, and that is where we have been investing so much of our time and funding for many years. That is why we are in the globalization space and also focusing in the digital areas because we see this market as requiring strategy consultants. We are seeing that our traditional competition is not really the focus anymore. We find ourselves competing with other strategy firms. I believe this is because Avasant has entered into the revenue-side of the business, not into the cost-saving side of the business. Now it is a different set of competition, and it is a different kind of consultant that needs to do this work.
Phil: Now, that is very interesting…
Kevin: I am equally interested in hearing your take on this, Phil.
Phil: We are entering a phase where we are talking about true societal impacts of change, Kevin. Five years ago, it was about the possibility of a few jobs getting lost to some offshore arbitrage. But now labor costs have almost become a dirty word in many enterprises. There is an increased focus for executives to drive out as much labor cost as they can in operational areas. And what frightens me is there are a lot of mid-career executives today who are stuck between the new world and the old world, and they are not developing their skills. Many of these operational folks in IT and business operations, in the short to medium term, are going to feel more pressure to add more value to their outputs. They are going to be expected to be more analytical, more strategic and creative, and they are going to need to get more involved in front-office type activities; and those jobs are not going to be available for everybody – there aren’t going to be as many of them.
I do think we are reaching a possible talent crisis in the industry over the next few years. And it is these types of rapid developments we are seeing in Cloud and robotic automation as well as just more mature outsourcing models, which is driving all of it. This is something I believe to be a societal problem. It is not just a political or corporate issue.
Kevin: Agreed. There is a labor gap, and we have significant underemployment, even in our own industry. And that lack of ability to align talent with the available and required expertise is our challenge as well. As we hire and bring in more strategic consultants, we are also looking for the people that we can train and grow in the industry with us. We are looking for high talent; we are not necessarily looking for the traditional sourcing advisor who has done 100 deals or 1,000 deals. Those individuals for Avasant, are increasingly a commoditized expertise, and that is not what our clients are asking for today. Clients do not invest their spend with us on our large transactions because they want us to do a sourcing deal for them. Yes, that is part of the deal. But what they really want is for Avasant to help them with whatever disruptive technology they are trying to implement or the strategy they want to implement or transformation. That is where Avasant is able to drive higher value for the client engagement.
Phil: It is interesting because when I talk with your competitors, they are all saying the same thing: There is not a shortage of business out there; there is a real shortage of finding the talented consultants who can steer clients to where they want to go, and it is getting harder to do that. The traditional consulting model does not often cater for that type of experience. Have you managed to counteract this trend?
Kevin: Yes, but I believe it is first about culture. We have a high retention rate in Avasant. We focus on knowledge management and consultant education. Although we are not a research firm, we have a significant amount of knowledge management, which means keeping information, models and strategic documentation that can be used and reused. As we continue to quickly evolve in this industry, it is not just about the human factor, it is also about the kind of intellectual property we can keep, that we can consistently make available to our consultants over time; that enables us to bring in smart consultants that can take immediate advantage to achieve the customer’s objectives.
You are correct. There is a talent gap in our industry. Our challenge is to move faster than our competition. We believe Avasant can continue to adapt to the industry more quickly because we are structured to ensure ongoing innovation, and it is rooted in our culture to do so. Rather than partaking in the “race to the bottom,” where the only driving factor is cost reduction, we are focusing on value. As we continue to focus on a broader set of services — you mentioned robotics, SMAC, and digital strategy—we will also continue to create more value for Avasant customer.
Phil: I have one final question for you: say you are given a role where you can be Lord of the Consulting industry for one whole week. What two changes would you make to that industry that you would like to see happen?
Kevin: Well, I never really thought of being the lord of anything. I am not sure I care about being lord of the sourcing industry [laugh]. Especially an industry that is changing the way it is today, but what I do care about is investing in a fantastic consultant culture and creating extraordinary service for Avasant’s clients.
So if you think about what I would like to change in our industry, and maybe we are driving it, is if you look at the airline industry today as an example. In the old days, and not all that long ago, traveling on an airline was a bit of an experience. You would have a nice meal, you might even have a nice smile and courteous service. Today we do not expect anything but a no-frills experience. As with the airline industry, consulting firms have become the same and highly commoditized with little client service and the willingness to serve others and be that steward the client is seeking. This is a key differentiator about how Avasant approaches the industry; we focus on providing extraordinary service. That means going and doing a few extra things and doing them very well. We will sponsor our clients to go to networking events to learn from their peers; we will sponsor client education programs, and through this process we ensure longer lasting relationships and more successful deals. We also sponsor corporate social responsibility and do a lot of nonprofit work with our clients.
If you are asking me what I would want to see as lord of the sourcing advisor industry for a day or for a week, I would say it is more about returning to quality and great client service. That is what Avasant continues to focus on today with each client encounter.
Phil: Well answered! Thanks for your time today, Kevin – and for being a good sport!
Kevin Parikh is Global CEO and Senior Partner at Avasant (click here for bio)
Posted in : Business Process Outsourcing (BPO), Cloud Computing, Digital Transformation, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, Outsourcing Advisors, Outsourcing Heros, Robotic Process Automation, SaaS, PaaS, IaaS and BPaaS, smac-and-big-data, sourcing-change, Talent in Sourcing
Wow. When the rumors leaked out about Vishal Sikka being tapped up for the Infosys CEO job, we thought this idle speculation, but a possibility that Vishal could have some role where he could absorb the nuances of the services business to potentially take over in a couple of years.
But – lo and behold – the old guard have decided it’s time to make a dramatic change and a big bold statement to the world by placing the popular tech innovator, Vishal Sikka, in charge of rediscovering that elusive Infosys mojo that has been absent for some time now. So… is the Infosys monarchy behaving like a Premier League soccer club and making a panic play to stave off relegation to the second tier of providers, or is this the boldest move yet from one of the TWITCH* provider family to make a late run at the Champions League?
Infovish Pros
Vishal is a technologist and much admired by technology-driven executives. His recent departure at SAP demonstrated how loved he was by the techno-purists and was seen by many as SAP selling its technology soul to appease the money-men. He was a driving force behind SAP’s HANA (Hasso Plattner’s brainchild) and the firm’s emerging Cloud capabilities – and his absence at the recent Sapphire event was even more depressing than Bill McDermott’s keynote speech.
Vishal will be key to driving Infosys’ platforms strategy. You only need to look at the acquisitions made by the likes of Accenture and IBM over the last couple of years to realize that Cloud-based platforms that underpin analytical, consultative value-add services are the long-term future of services. One of the brighter spots in Infosys’ recent troubled history has been its investments in its Edge platforms which target key industries such as insurance and manufacturing, and horizontal competences such as procurement and marketing. Having a real tech products guy at the helm will do wonders for helping Infosys develop out these platforms further and develop a “products culture” for that part of the firm.
Something needed to change – and fast. Despite a pretty decent financial performance in the market over the last 18 months (though lagging its major Indian counterparts), it was still abundantly clear that Infosys was struggling to break from its legacy past and make the changes necessary to rebuild company moral, reinforce strategic direction and re-invigorate the whole company culture and ethos. With TCS and Cognizant continuing their surge, Wipro getting its own act together and the emergence of Tech Mahindra and HCL as genuine contenders for deals that Infosys would have easily won in days-gone-by, the firm was getting squeezed and executives continued to leave the firm at a frequent clip – some volunatily, but most forced out. Infosys had managed to become cast as a “legacy” provider by several industry observers, which is not a place anyone wants to be in this cut-throat market. Vishal is an outsider, he is new blood, he has youth on his side. He gives them the immediate facelift they were craving.
Infovish Cons
Vishal is not a services guy. Technology products people often struggle to understand the nuances, challenges and culture of IT and business process services. Most view services as the grunt work that does the plumbing, while all the important stuff gets done in the innovation lab. HP practically committed Hara-kiri when it appointed Léo Apotheker, a software executive (also from SAP), to fix a company whose primary business was services and hardware. Léo ended up blowing $10bn on Autonomy, for no fathomable reason, before being hastily ejected, and Meg Whitman is still cleaning up the mess he left behind. While we laud the bold approach Infosys is making by putting a technology products innovator at the helm, the firm is still primarily a services business with a services culture. The CEO needs to understand what make millennials tick, how to develop training programs, how to keep wages low and morale high, how to develop succession plans and “up and out” models that work, how to inject analytical and creative thinking into its staff. In addition, 94% of Infosys staff are still India-based and they need to figure out a people strategy that is global, not just tailored for the Indian employment market. However which way we look at this, services is about people first, and Vishal needs to figure out how to make Infosys a more attractive career proposition for the best college graduates and experienced executives, than the likes of TCS and Accenture.
Vishal needs to balance the realities of the present world with the one we’re moving into. Infosys isn’t IBM – it isn’t at the sheer size and scale that it can throw all its eggs into the Cloud basket and take its eye off the ball with its existing business. Infosys needs to keep one foot firmly planted in the reality of today’s business, while also developing for the future. While we all know the future is less about effort-based services and more about platforms with distinctive, value-add services, most of today’s buyers are still focused on global scale with their global sourcing strategies and that is where the bulk of the money is – and will be – for a few years to come. Even on today’s analyst call, Murthy declared that “10% of revenue being product driven in 5 years would be a good achievement”, which is statement enough that Vishal needs to place a lot more focus on the 90%. Vishal needs to take a pragmatic view of the pace at which Infosys can really change and evolve – coming up with the big vision is one thing… executing on it is another.
The Bottom-line: The big vision is easy, executing on it is another ball-game entirely
Services firms are so much more than development labs – they are people environments the size of small cities that need very smart management which can manage their costs, while providing great careers for the brightest talent around. Vishal needs to make sure he has the right management under him which knows services back-to-front to create a world class services organization that can support its home-grown disruptive and innovative platforms. He must resist the temptation not to surround himself with yes-men, but with people who can challenge his vision and make sure they are evolving it in the right way to be as competitive as their rivals.
*TWITCH refers to Tech Mahindra, Wipro, Infosys, TCS, Cognizant, HCL
Posted in : Business Process Outsourcing (BPO), Cloud Computing, CRM and Marketing, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, SaaS, PaaS, IaaS and BPaaS, sourcing-change, Talent in Sourcing
